Kenyan banks are expected to upscale their lending in the coming weeks, despite previous concerns about low consumer purchasing power and high government borrowing.
This is according to the Central Bank of Kenya's (CBK) Market Perceptions Survey conducted in May 2025, which provided insight into private lenders' outlook for credit growth.
Despite commercial banks lowering their credit growth forecasts for 2025, these banks expect lending activity to increase in the near future due to a number of factors.
According to the survey, the rebound is supported by a stable macroeconomic environment, improved liquidity conditions and recovery in some key sectors, including agriculture, manufacturing and construction.
Moderate demand for credit was reported by banks in the two months preceding the May 2025 Monetary Policy Committee (MPC) meeting. However, demand is expected to increase in June and July in a move that is largely driven by declining interest rates and a slow but steady recovery in the country's economy.
The survey noted that the anticipated increase in demand is likely to come from businesses seeking working capital. Businesses in agriculture, construction and manufacturing are also expected to want expansion financing.
Banks also reported that they were scaling up digital lending platforms in a move aimed at improving access to credit among retail clients and micro, small, and medium enterprises (MSMEs). This is just one of several strategic factors expected to further fuel lending in the coming months.
The CBK, in its latest Monetary Policy Committee (MPC) report published on Tuesday, June 10, announced that it had reduced the base lending rate by 25 basis points to 9.75 per cent from 10.00 per cent. This anticipated decline in lending rates is also projected to stimulate borrowing across retail, SME, and corporate segments.
CBK Governor Kamau Thugge on Tuesday exuded confidence in the banking sector, which he claims remains resilient, with strong liquidity and capital adequacy ratios.
The ratio of gross non-performing loans (NPLs) to gross loans stood at 17.6 per cent in April 2025 compared to 17.2 per cent in February.
Besides lending, the survey also gathered insights into employment expectations in 2025, with banks largely anticipating increasing staff numbers in 2025. This is supported by branch expansion, adoption of digital strategies, and the need to replace outgoing staff.
Non-bank financial institutions, in contrast, offered mixed hiring outlooks. 34 per cent of industries in the non-banking sector stated they would not hire due to rising operational costs and delayed payments from government entities.
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